...Operations Management, 10e (Heizer/Render) Chapter 12 Inventory Management 1) According to the global company profile, Amazon.com's advantage in inventory management comes from its almost fanatical use of economic order quantity and safety stock calculations. Answer: FALSE Diff: 1 Topic: Global company profile Objective: no LO 2) A major challenge in inventory management is to maintain a balance between inventory investment and customer service. Answer: TRUE Diff: 1 Topic: The importance of inventory Objective: no LO 3) Which item to order and with which supplier the order should be placed are the two fundamental issues in inventory management. Answer: FALSE Diff: 2 Topic: The importance of inventory Objective: no LO 4) One function of inventory is to take advantage of quantity discounts. Answer: TRUE Diff: 1 Topic: Functions of inventory Objective: no LO 5) Work-in-process inventory is devoted to maintenance, repair, and operations. Answer: FALSE Diff: 1 Topic: Functions of inventory Objective: no LO 6) ABC analysis classifies inventoried items into three groups, usually based on annual units or quantities used. Answer: FALSE Diff: 1 Topic: Managing inventory Objective: LO12-1 7) In ABC analysis, "A" Items are the most tightly controlled. Answer: TRUE Diff: 2 Topic: Managing inventory Objective: LO12-1 1 Copyright © 2011 Pearson Education, Inc 8) ABC analysis is based on the presumption that carefully controlling all items is necessary to produce...
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...Does a MRP system provide value to an organization 4 i. Value added by MRP system 4 b. The problem 4 i. Frequent Back Orders 4 ii. High Inventory Levels 4 c. Benefits of MRP System 5 i. How will ABC, Inc. benefit 5 d. High Level Approach 6 i. Assessment of resources and costs ii. Presentation to Management 6 e. Audience 6 i. Who will benefit 6 ii. How the beneficiaries will benefit 6 iii. The role of senior management in the implementation 6 Milestone 1 a. Business problem relooked 7 i. Problems facing ABC 7 b. Company background 7 ii. ABC’s business 7 iii. ABC’s current state 7 c. Discussion of business issue 8 i. Why MRP Implementations Fail 8 ii. Risks associated with implementation 8 d. Benefits of Solving the problem 8 i. Benefits From Good Design 8 ii. Benefits From Correct Implementation 8 e. Initial business/Technical Approach 9 i. Implementation Approach 9 ii. Management Commitment Required 9 f. High Level Solution 9 i. Requirements and Design 9 ii. Specific Functions 9 Milestone 2 a. Implementation 10 i. Configuration 10 ii. Integration 10 iii. User Education 10 b. Design 10 i. Modules 1. Demand Management Customer Related Files (DM) 11 2. Rough Cut Capacity Planning File (RCCP) 11 3. Master Production Schedule File (MPS) 11 ...
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...About Nestle Nestlé is a multinational packaged foods company founded and headquartered in Vevey Switzerland. it is the world`s foremost Nutrition. Health & Wellness Company committed serving consumers all over the world. Their focus on responsible nutrition and promoting heaLth and wellness is a core value, emphasizing responsibility and sustainability. Nestlé products are sold in almost every country in the world. MISSION STATEMENT Nestlé is dedicated to providing the best foods to people throughout their day. Throughout their lives, throughout the world. With our unique experience of anticipating consumers’ needs and creating solutions. Nestle contributes to your well-being and enhances your quality of life.” COST ACCOUBTING INFORMATION SYSTEM OF NESTLE INPUT MEASUREMENT BASIS STANDARD COSTING Nestle is using STANDARD COSTING as a base for input measurement Standard costs are usually associated with a company’s costs of direct material, direct labor, and manufacturing overhead. Rather than assigning the actual costs of direct material, direct labor, and manufacturing overhead to a product, nestle’ like many manufacturers assigns the expected or standard cost. This means that its inventories and cost of goods sold will began with amounts reflecting the standard costs, nor the actual costs, of a product Nestle’, of course still has to pay the actual costs. As a result there almost always differences between the actual costs and the standard...
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...ABC Company ACC 206 Principles of Accounting II The ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles, introducing the new project to build cedar dollhouses by shingle scrap materials for reaching $3 million annual sales within the next 3 years. Explain the overall risk profile of the ABC Company based on current economic and industry issues. In order to help out the CEO I prepare reports that will contain the information regarding the project. These statements refer to the accompanying Excel spreadsheet as well as word documents. The statements are; Cash Flow statements, Product Cost, Net present value, Depreciation, Contribution Margins and Break-even Point of sales. In the last conclude the major risk factors in this project, management accountant responsibilities of the project and recommendations. I. An overall risk profile of the company based on current economic and industry issues that it may be facing. It’s a mystifying time to be in the manufacturing industry. After a severe global financial crisis hasten merchandise prices and flounce to the side a year detonation, a promising revival give the industry reason to hope. But the global economy has degenerated into another less severe downturn in 2011, hindering global demand and forcing down merchandise prices once again. The move of the industry focusing on all over the risk based on current economic and industry concerns. Many industry leaders...
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...February 26, 2012 Companies that are successful financially know what their costs are and how those costs are being spent. The company I have chosen wants to change from a general accounting system where costs are put in general categories and they currently do not have any allocation of costs. I would like to explain the success my company could have when they implement using cost accounting in their operations. Artis is a research and development company as well as a manufacturing company. Artis designs Active Protection Systems (APS) for vehicles. Their main purpose is to design and engineer a product that will protect vehicles from the threat of missiles. These Active Protection Systems are constantly being engineered and re-engineered as new threats and potential threats arise. Artis has to research, design and engineer the product continuously. There developed different models version that can then be manufactured and sold based on the customer’s demand on the sale contracts. The major costs associated with the engineering of the Active Protection System are the costs of the labor (both labor spent on their facility and labor spent at government sites), the costs of the various specialized subcontractors, the costs of the materials and the indirect costs associated with those costs. The company needs to do several things relating to their engineering costs. They need to set up a job...
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...February 26, 2012 Companies that are successful financially know what their costs are and how those costs are being spent. The company I have chosen wants to change from a general accounting system where costs are put in general categories and they currently do not have any allocation of costs. I would like to explain the success my company could have when they implement using cost accounting in their operations. Artis is a research and development company as well as a manufacturing company. Artis designs Active Protection Systems (APS) for vehicles. Their main purpose is to design and engineer a product that will protect vehicles from the threat of missiles. These Active Protection Systems are constantly being engineered and re-engineered as new threats and potential threats arise. Artis has to research, design and engineer the product continuously. There developed different models version that can then be manufactured and sold based on the customer’s demand on the sale contracts. The major costs associated with the engineering of the Active Protection System are the costs of the labor (both labor spent on their facility and labor spent at government sites), the costs of the various specialized subcontractors, the costs of the materials and the indirect costs associated with those costs. The company needs to do several things relating to their engineering costs. They need to set up a job...
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...Final paper The ABC Company is a manufacturing firm that specializes in making cedar roofing and siding shingles, with recent sales at $1.2 million, the company wants to reach the $3 million mark over the next 3 years. As a newly hired Corporate Controller for this company, I have been assigned the task of developing and overlooking a new plan made by the CEO that will use some of the shingle scrap materials to build cedar houses. The newly develop plan will certainly bring new challenges for the company on the form of increased cost and labor; However it will also provide additional revenue and gross profit to help reach the growth targets. On this paper I would go over the details of the report made for the CEO that includes information on the overall risk profile based on actual market conditions, a current company cash flow, the product cost and any potential investments that might accelerate profits. The Risk profile for this company includes several different factors that are mostly due to current market conditions, and the level of risk the company will face by adding extra inventory and expenses. Unfortunately risk is a reality of doing business, whether the company is large or small, public or private, risk will always be present since nothing on the business world warrants a guarantee. Some of the key risk points are: Inventory represents a big portion of the cash flow, therefore having extra inventory on hand will have an impact on the company's future cash...
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...Umirajah Kathirgamathas Professor Westwater Financial Management 5/26/16 Financial Analysis Project Liquidity Ratios Current Ratio 2013 | 3.07 | 2014 | 2.68 | 2015 | 1.75 | Quick Ratio 2013 | 1.66 | 2014 | 1.08 | 2015 | 0.73 | Asset Management Average Collection Period 2013 | 36.5 days | 2014 | 36.5 days | 2015 | 54.74 days | Inventory Turnover 2013 | 9.03x | 2014 | 5.59x | 2015 | 4.19x | Fixed Asset Turnover 2013 | 11.5x | 2014 | 11.95x | 2015 | 12.10x | Debt Management Total Debt to Total Assets 2013 | 40% | 2014 | 46% | 2015 | 59% | Times Interest Earned 2013 | 3.33x | 2014 | 7.96x | 2015 | 1.49x | Profitability Profit Margin 2013 | 5% | 2014 | 3% | 2015 | 0.3% | Return on Equity 2013 | 29% | 2014 | 16% | 2015 | 1.2% | DuPont Equation Year | Profit Margin | Total Asset Turnover Ratio | Equity Multiplier | 2013 | 0.05 | 3.05 | 1.68 | 2014 | 0.03 | 2.60 | 1.86 | 2015 | 0.003 | 2.03 | 2.48 | For the past few years ABC Company’s performance has changed a considerable amount. When deciding if ABC Company deserves the loan of $1,000,000 that is necessary for its up coming selling cycle one must look at various aspects of the company’s performance to determine the level of risk that is associated with the loan. Four key aspects of the company that need to be looked at are its liquidity, efficiency, leverage and profitability. In regards to liquidity the...
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...Inventory Management must be designed to meet the dictates of market place and support the company’s Strategic Plan. The many changes in the market demand, new opportunities due to worldwide marketing, global sourcing of materials and new manufacturing technology means many companies need to change their Inventory Management approach and change the process for Inventory Control. Inventory Management system provides information to efficiently manage the flow of materials, effectively utilize people and equipment, coordinate internal activities and communicate with customers . Inventory Management does not make decisions or manage operations, they provide the information to managers who make more accurate and timely decisions to manage their...
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...Inflows Rosa Alvarez, Quenana Kent, Renee Witucki, Steven Mitchell, K’Dawn Saucedo ACC/544 October 15, 2012 Robert Cornett Internal Controls for Inflows Team C Consulting Firm Inc. was hired to review ABC Manufacturing Company’s policies and procedures. Team C Consulting Firm Inc. reviewed several areas of the business such as, cash, sales, accounts receivable, inventory, and production policies and procedures. Based on Team C Consulting Firm’s review and findings, ABC Manufacturing Company has weaknesses in each of the mentioned areas. Therefore, it is necessary ABC Manufacturing Company is provided with a comprehensive proposal of internal controls for each function of the company. Cash Controls Cash is the most liquid asset that a company possesses so it is important that certain controls be put in place in order to protect against theft, fraud, or any other type of misappropriation that may occur with a company’s cash supply. There is no paper trail that follows cash, and it is difficult to determine if cash is missing, for this reason cash should be the most tightly controlled asset. In order to properly control cash there are certain actions that must be implemented. Failing to implement these procedures can create an atmosphere of immense risk for the company and its cash balances. The first control procedure that should be implemented is separation of duties. Cash is usually kept in a cash register or sent via mail. Whoever receives cash should not be the person...
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...the importance of inventory control with respect to supply and demand. Inventory is stored resource that may be used for current or future need to satisfy the organizations customers. Inventory is very important to companies as it is the most expensive asset that comprises over fifty percent on invested capital, and keeping control of inventory is crucial to managers, companies must learn to balance between high and low levels of inventory to keep customers satisfied. 2. What benefit can tools such as ABC analysis and just-in-time controls provide for an organization? The purpose of Just in time controls or ABC analysis is simple to allow an organization a means of controlling how they focus on their invested inventory. The ABC analysis provides a means to divide an organization’s items into 3 categorical groupings based on value. These groups account for the entire invested inventory, the A group consists of major inventory costs usually about 70% in value but 10% in actual end items. B groups are usually median priced, and median quantity, and C groups or low priced and high quantity. 3. How can an enterprise resource planning system assist a firm with improving its business operations? According to the text quantitative analysis for management the purpose of an Enterprise resource planning system is to reduce cost by integration of a companies’ operations. Data is entered into a database then can be quickly accessed by any individual in the company, this helps to benefit...
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...Allied Office Products Report to Management Brian Juin Phon Chan Karine Arcand Daniyal Tanveer 5980487 5236461 6024848 Christina Yee Andrea Alamo 5991901 6041222 ADM4345A November 13, 2013 Page 1 of 13 Table of Contents Introduction ......................................................................................................................................................... 3 Corporate/Divisional Strategy ........................................................................................................................ 3 TFC Business Strategy.................................................................................................................................... 3 Brief SWOT Analysis ..................................................................................................................................... 4 Value-chain Analysis ...................................................................................................................................... 4 Key Success Factor ............................................................................................................................................. 4 Management Control Systems ............................................................................................................................ 5 Recommendations .....................................................................................................................................
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...011-0839 Just-In-Time Manufacturing - By Design or By Default Dr. Shellyanne Wilson The University of Trinidad and Tobago O’Meara Campus 78-94 O’Meara Industrial Park, Arima, Trinidad, West Indies. shellyanne.wilson@utt.edu.tt Telephone: 868-685-8744 POMS 20th Annual Conference Orlando, Florida U.S.A. May 1 to May 4, 2009 Just-In-Time Manufacturing – By Design or By Default ABSTRACT Just-In-Time (JIT) manufacturing implementation in small manufacturing companies is often not a sophisticated exercise, following a series of well-prescribed steps. Instead, JIT implementation can involve a series of incremental steps, and missteps, before the desired outcome is achieved. In some cases, JIT is less of a conscious design and more of a default position. This paper will examine the role of a company’s resource configuration in leading to the use of JIT manufacturing. The research paper reports on a single case study of a small manufacturer that altered its resource configuration from a producer – consumer relationship separated by a buffer, to a simultaneity constraint. The results of the case study show that the removal of the buffer system increased the manufacturing system’s need for mix flexibility, and the final implementation required unplanned structural and infrastructural changes to adequately meet marketing requirements. 1. INTRODUCTION Just-In-Time (JIT) is a system that focuses on waste reduction and continuous improvement to achieve operational excellence...
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...ABC analysis (Inventory) In supply chain, ABC analysis is an inventory categorization method which consists in dividing items into three categories, A, B and C: A being the most valuable items, C being the least valuable ones. This method aims to draw managers’ attention on the critical few (Aitems) and not on the trivial many (C-items). Prioritization of the management attention Inventory optimization is critical in order to keep costs under control within the supply chain. Yet, in order to get the most from management efforts, it is efficient to focus on items that cost most to the business. The Pareto principle states that 80% of the overall consumption value is based on only 20% of total items. In other words, demand is not evenly distributed between items: top sellers vastly outperform the rest. The ABC approach states that, when reviewing inventory, a company should rate items from A to C, basing its ratings on the following rules: A-items are goods which annual consumption value is the highest. The top 70-80% of the annual consumption value of the company typically accounts for only 10-20% of total inventory items. C-items are, on the contrary, items with the lowest consumption value. The lower 5% of the annual consumption value typically accounts for 50% of total inventory items. B-items are the interclass items, with a medium consumption value. Those 15-25% of annual consumption value typically accounts for 30% of total inventory items. 1 The...
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...ABC Chemical Company Goes Global* Driven by competitive pressures, and the attractiveness of the industry’s fastest growing market in the world, a U.S.-based chemical manufacturer, ABC Chemical Company (name changed to maintain confidentiality) considered expansion into Asia, specifically, China. William Smith is the International Marketing manager for ABC Chemical Company. William has been tasked with expanding ABC’s manufacturing and distribution to the Asia Pacific region. Many changes in the powder coating industry have forced ABC to reconsider its their global strategy. To date, they have exclusively manufactured and exported from the Americas. Higher costs and tougher competition have forced ABC to look to the Asia Pacific Region to reduce these costs (specifically shipping) and remain competitive. ABC Chemical Company is a U.S.-based business that manufactures and distributes specialty chemicals to various industries for use in manufacturing finished products. ABC Chemical Company’s powder coating division needs to expand into Asia to remain competitive. Many of the powder coating division’s customers are moving their plants to Asia in an attempt to expand their markets and lower their production costs. As well, all of ABC Chemical Company’s competitors are opening production facilities in Asia to meet their customer’s needs, to expand their markets and lower their costs. For Asian and some European manufactures, powder coatings are a commodity with...
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